The growth rates and firm size: Gibrat’s legacy in Indonesian SMEs  

Oleh:

Runtuk, Johan K. ; Wirjodirdjo, Budisantoso ; Vanany, Iwan

Jenis: Article from Proceeding
Dalam koleksi: The 14th Asia Pacific Industrial Engineering and Management Systems Conference (APIEMS), 3-6 December 2013 Cebu, Philippines, page 1-7.
Topik: Gibrat’s Law; firm growth; SMEs in Indonesia; growth rates; firm size
Fulltext: 1268.pdf (255.28KB)

Isi artikel

Gibrat’s Law becomes a reference of many researchers to explain the firm’s growth phenomenon. This law was initially applied to explain income distribution [1], but now it has been extended for other applications. In this paper, we examined whether the Gibrat’s Law hold for small and medium scale enterprises (SMEs) in Indonesia, specifically in East Java Province. By using panel data of selected cities in manufacturing sectors of SMEs, we continue to investigate the law, whether the growth rates are independent of firm size. The findings revealed the influenced of industry sector context to Gibrat’s legacy. Despite the fact that Gibrat’s Law is rejected to the panel data, there are milder rejections if we see based on their industry classification context. The findings also suggest the appropriate theories to get proper understanding of those phenomenons.

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